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Tuesday, January 19, 2010

Folks Care for Pets as if They Were Children

PetMed Express reported results today. While last quarter was a bit short of expectations, the company beat estimates this time around. We continue to like the company's annuity-like business model, free cash generation, and debt free balance sheet.

Total revenue increased 11% Y/Y to $48 million with reorder revenue increasing 17% Y/Y to $37.6 million (78% of total) and operating income increased 12% Y/Y to $8.4 million (17.4% margin). Net income was up 14% Y/Y to $5.6 million (11.6% margin) and EPS of $0.25 increased 18% Y/Y. The company's net cash position increased 64% Y/Y to $68.9 million and retained earnings increased 19% Y/Y to 90.5 million.

Clearly, an impressive performance during a recession. Pet care continues to show resiliency and, apparently, is not discretionary as folks care for pets as if they were children. We like it.

Happy investing,

Jeffrey Walkenhorst
CommonStock$ense

Disclosure: long PETS.

© 2010 Jeffrey Walkenhorst
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